Retail projects in Bavaria: Major uncertainty after court judgements

Everything used to be simpler – at least for retail developers and municipal authorities. Businesses with small premises could generally even be set up in residential areas. Retail space larger than 800 m2 was located exclusively in the city centre or special areas. Now however, two judgements by the Bavarian Administrative Court (BayVGH) have sown the seeds of uncertainty.

The judgements meant that two independent, small-space retail stores were to be treated as one large project. Approval was refused – the possible consequences are far-reaching.

Until now, there have been various regulations to prevent unauthorised retail agglomerations relating, for example, to the distance between individual properties, their access and delivery routes and the joint use of staff rooms. A direct connection between main and ancillary operations (e.g. a supermarket with a back shop, key-cutting service and fast-food outlet) might fall into this category. The individual rules depend, in connection with the building use ordinance, on the appropriate laws and decrees of the Federal States concerned. Markus Wotruba, head of location research, BBE Handelsberatung says this: “In Bavaria, up to now, the administrative practice has applied that at least three independent businesses must be grouped together in order to form an agglomeration. That has now changed.“

The following would, until now, have been a typical case in Bavaria: in addition to a supermarket with retail space of 800 sqm, an adjacent drinks store of 350 sqm could generally be included without problem. This would occur, of course, with the approval of the municipal authorities. According to the judgements of the Bavarian administrative court (15 N 15.1201 dated 14.12.2016 and 15 N 15.2042 dated 28.02.2017), both buildings together now meet the criteria for a large business – which is why the expansion could not be approved” says Wotruba.

Both judgements centred on cases in small communities where building plans had not been approved because, in the view of the BayVGH (the Bavarian administrative court), they would run counter to regional planning objectives. In its substantiation, the court also stated that a municipality should not plan any retail projects that might restrict the development of a city ranking higher in the hierarchy of central locations. The court however saw just such a trend here.

Nevertheless, the grounds for the judgements are anything but clear. The requirements for the presence of an agglomeration are not defined in the Bavarian State development Programme (LEP). The concept is not covered by the stated objectives of the LEP, but only in the “small print“ (the reasons for the objectives) and to this extent only has little legal relevance. But it was on this basis that the court made the aforementioned far-reaching interpretation. According to Wotruba: “Apart from decisions in individual cases, these judgements have led to uncertainty and to preventive rejection of plans as not every approval authority considered itself capable of assessing every case in all its consequences. The devil lies in the detail of the verdicts.”

In practice this means that every new food shop with a neighbouring drinks store might be suspected of being an agglomeration. Even an individual food shop near to a residential district, under some circumstances cannot necessarily be approved. As in residential districts, food stores are permitted within certain limits. There is therefore the risk of an agglomeration forming. Wotruba says “The judgements have far-reaching consequences which should be considered as they apply the term agglomeration not only to existing space but also to development plans as a whole”. According to the decisions, an agglomeration exists if an extension of space is in principle possible – approval could therefore be refused even as a first development. Suppose a developer is planning an isolated supermarket with the maximum retail space permitted at that location. If only the planning requirements for this exist, the future building of a neighbouring drinks store, according to these judgements, would meet the criteria for an agglomeration. Wotruba says: “The judgements of the Bavarian administrative court raised a great many questions and have given rise to a state of uncertainty. Uncertainty however is definitely something that the retail sector does not need. The onus is now on the legislator to ensure greater clarity”.

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Markus Wotruba

BBE Handelsberatung München
Brienner Str. 45
D-80333 Munich

Tel.: +49 89 55118-176
Fax: +49 89 55118-153
E-mail: wotruba@bbe.de